Hong Kong Police crackdown on cryptocurrency scam involving counterfeit currency

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As an analyst with extensive experience in financial crime and law enforcement, I find the surge in counterfeit banknotes being circulated via cryptocurrency scams in Hong Kong deeply concerning. The reports of fake notes worth millions of Hong Kong dollars being seized, primarily linked to three major cryptocurrency scams, are a clear indication that cybercriminals are increasingly leveraging cryptocurrencies for their illicit activities.

Officials in Hong Kong have warned about an increase in fake banknotes entering circulation, often as part of cryptocurrency fraud schemes.

Based on a recent news article, the Hong Kong law enforcement agency confiscated a total of 3,396 counterfeit banknotes during the first four months of 2024. The combined value of these forgeries reached HK$2.55 million, which is roughly equal to $326,130 in U.S. currency.

Three notable cryptocurrency scams and frauds account for a significant portion of the counterfeit tokens in circulation.

As a researcher studying financial crimes, I came across an intriguing case where a cunning scammer established a bogus cryptocurrency exchange kiosk in Tsim Sha Tsui. Unbeknownst to an unsuspecting woman, she exchanged HK$1 million worth of Tether’s USDT stablecoin at this fake counter. The crafty fraudster then absconded with the crypto funds, leaving the woman in possession of worthless HK$1,000 paper notes.

As a crypto investor, I’ve come across reports suggesting that the Hong Kong police have confiscated an alarming number of items related to scams. Specifically, they’ve seized 1,693 “training notes” and 347 subpar counterfeit bills. These training notes are designed to mimic authentic currency and were likely used for educating bank personnel.

Three people have been taken into custody by the police for their involvement in these fraud schemes. The confiscated funds are now in police possession.

In early part of the year, authorities in Hong Kong seized approximately 3,000 counterfeit banknotes, a safe, and a currency-counting device from a cryptocurrency exchange business situated in the Tsim Sha Tsui area.

Traditional Chinese practices involve the use of actual-looking but not genuine banknotes, known as “hell notes,” as offerings during rituals honoring ancestors or deities.

Currently, the authorities request that citizens surrender any fake currency to the police to avoid being charged with “the crime of attempting to pass counterfeit money.”

Over the past year, there has been a substantial increase in the number of cryptocurrency-related criminal activities reported to the Hong Kong police force. The data shows that such incidents have risen from 2,336 to 3,415 cases.

A whopping $553 million worth of funds have been lost as a result.

The scams primarily consisted of two different tactics. 

In the initial situation, swindlers aim to persuade victims into moving money into their personal wallets. Such a tactic is commonly employed in schemes known as pig butchering scams.

Scammers are said to employ crypto exchanges located overseas, adding complexity to the investigation process according to reports from law enforcement agencies.

In another situation, scammers took advantage of the popular buzz surrounding cryptocurrencies. As cryptocurrencies gained significant attention in financial circles, these fraudsters exploited the ignorance of their targets to carry out deceitful schemes. This trend of crypto-related crimes has triggered heightened vigilance. The securities regulatory body in Hong Kong has established a system for granting licenses to crypto service providers.

As a analyst, I’d rephrase that sentence as follows: The Chinese government has committed to collaborating with the UAE in the fight against cybercrimes.

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2024-06-03 14:38